Updates on the EIDL Program and EIDL Advance Deductions

Updates on the EIDL Program and EIDL Advance Deductions

On December 27, 2020 the new relief bill was signed into law and made several adjustments to the EIDL program:

  1. EIDL Advance Deduction for PPP Forgiveness
    The Consolidated Appropriations Act of 2021 repeals the requirement that borrowers must deduct the $10,000 EIDL Advance amount from the forgivable amount of the PPP loan. On January 12, 2021 the SBA communicated that if a PPP borrower had its EIDL advance amount deducted from the PPP forgiveness amount, the SBA will remit the EIDL amount to the lender, together with interest on that amount up to the date of remittance. Lenders will then credit/reimburse the PPP borrower.

    The SBA did not indicate when they would begin this process. We will provide updated information once we learn more.

  2. The EIDL Advance Grant
    The EIDL Advance grant was offered alongside disaster loans. The amount of the grant was determined by the number of employees indicated on the EIDL application ($1,000 per employee, up to a maximum of $10,000). Although the EIDL Advance program ended July 11, 2020, when it ran out of funding, the Consolidated Appropriations Act of 2021 will reinstate the program.
  3. EIDL Terms
    EIDLs have a 3.75% interest rate for small businesses and a 2.75% interest rate for nonprofit organizations, a 30-year maturity, and an automatic deferment period of one year. The loan may be used for working capital and normal operating expenses.
  4. EIDL Second Draw
    Small businesses and nonprofits in low-income communities that suffered a 30% economic loss and have fewer than 300 employees are eligible to apply for and receive an advance grant of $10,000, or the difference between $10,000 and a previous advance grant amount. The EIDL advance grant application will be available on the SBA website at SBA.gov.

IF YOU HAVE APPLIED FOR FORGIVENESS AND HAVE AN EIDL ADVANCE – PLEASE READ

For customers who have already applied for forgiveness and were notified you owe money on your EIDL advance, please read the following as it applies to you:

  • If you have received and signed a loan modification on your EIDL advance: Firstrust has suspended payments due on the EIDL advance, as that has been repealed in the new bill. Do not send us a check or take any action to pay the EIDL until further notice. 
  • If you have received but not yet signed a loan modification on your EIDL advance: Do not sign or return the loan modification form. Do not send in any payments.
  • You applied for forgiveness and owe money on your EIDL advance, but have not received a loan modification:  Do not take any action or send in any payments until further notice.

If you have an EIDL loan and have not applied for forgiveness, you can move forward and apply when you are ready. The SBA stopped deducting the EIDL advance from forgiveness applications on 12/29/20.

The Economic Aid Act repeals the CARES Act provision requiring EIDL Advance Amounts received by a PPP borrower be deducted from the forgiveness payment made by the SBA to the PPP lender.

On January 12, 2021, the SBA communicated that if a PPP borrower had its EIDL advance amount deducted from the PPP forgiveness amount, the SBA will remit the EIDL amount to the lender, together with interest on that amount up to the date of remittance. Lenders will then credit/reimburse the PPP borrower. 

The SBA did not indicate when they would begin this process. We will provide updated information once we learn more. 

Updates will be posted to the COVID-19 Resource Center as soon as we receive more guidance and direction from the SBA.